Why is the Uniti (ASX:UWL) share price up 10% on Monday?

The telecommunications company is grabbing attention today…

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A man wearing glasses sits back in his desk chair with his hands behind his head staring smiling at his computer screens as the ASX share prices keep rising

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Key points

  • The Uniti share price is trading 10% higher today following its latest update
  • Multiple approaches have been made towards Uniti, suggesting an interest in acquiring the company
  • While there are no official offers, investors are bidding up the company’s shares today

The Uniti Group Ltd (ASX: UWL) share price is gaining today as investors rally around the company’s receipt of multiple acquisition approaches.

Market participants have responded with exceptional ferocity on Monday, with more than 7.4 million shares having been exchanged since the opening bell.

At the time of writing, the Uniti share price is $4.135, up 9.68% from its previous closing price. However, the telecommunications company reached an intraday high of $4.26. For context, the S&P/ASX 200 Index (ASX: XJO) is trading 0.55% lower.

Let’s check what the driving force behind the Uniti share price movement could be on Monday.

Belle of the ball

In a short, almost inconspicuous, share buyback update on Monday, Uniti shared some new information with the market. It appears the contents of this update have captured the imagination of investors, as the Uniti share price pushes higher.

Firstly, the share buyback was revealed on 27 October 2021. At that time, the company announced it planned to buy back up to 10% of shares on issue. This was reinforced further with a release in November detailing strong recent financial performance.

Today, Uniti told shareholders that it has received multiple approaches from more than one party. Furthermore, the company noted this indicated a potential interest in the acquisition of the telecom player.

However, at this point, the interest has not been accompanied by any specific details around timing, price, or conditions. As such, Uniti Group cannot guarantee that any approach will result in an official proposal.

The announcement follows a year of uncharacteristically high merger and acquisition activity on the ASX.

What has the Uniti share price been up to?

The Uniti Group share price has been hot real estate over the last 12 months. Riding a wave of renewed optimism towards the telecommunications sector, Uniti is now up 123% in the past year.

Notably, the inflated share price has also driven the company’s price-to-earnings (P/E) ratio higher. Around June of 2021 Uniti was valued at ~49 times earnings. In contrast, the company is now trading at ~90 times earnings.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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